Illusory return to economic normalcy

27-06-2009

“Everything would be ok if it weren’t for that CNN scaring us out of our wits, giving us all those stories and commentary on the recession and presumed bad economy,” was the statement someone made at the table as we were having breakfast at a delightful B&B of the most charming Victorian-accented town in Washington State: Port Townsend.

A centerpiece for conversation, that’s what that statement became, where everyone could contribute regardless of level of knowledge or degree of ignorance… except for me, preferring to listen intently while doing the honors to some great French toast.

I have a feeling that only artists, dreamers, writers and aspirers in those categories live in or visit communities such as Port Townsend. There are, of course, three hundred workers at the local paper mill… afraid, one assumes, that an extended recession – added to a stricter enforcement of environmental standards – will force the mill to shut down (as rumors have it); and these folks are not dreamers, only holders of those few jobs left in America with a living wage; fading remnants of a blue collar middle class that made this nation a proud producer of wealth… now, in the globalization frenzy turned into a reckless consumer-on-credit.

Unfortunately, and contrary to the optimistic tone of the discussion which ensued, ours is not a presumed bad economy… for what we are living through is but the early stage of a long and deep recession – we dare not call it depression – and not just a business cycle. If we are unwilling to see the obvious systemic changes starting to take place around us, we are burying our heads in the sand, for it isn’t the news accosting us 24-7 but what’s in the news.

Unemployment is sure to continue going up, if at a decreasing rate, until we reach the low teens which when combined with the unstated unemployment (those who are not in the statistical count or are underemployed in hours or skills) could by next year bring the real, if unpublished, number in unemployment close to 20 percent. And what is even worse, that level of true unemployment will stabilize around that figure.

In a global economy, such as the one we are in, self-confidence level means little or nothing in the long run. The belief that just because we are a society with superior aspirations our dreams will be fulfilled is a chimera; our dreams are not much different from those of 6 billion people around the globe. We must realize that the so-called American dream was a thing of the past, something then realizable because of our self-contained, huge marketplace without commercial barriers, the largest by far in the world at that time, and the critical reason for past economic success – something evidenced and written about by socio-historian Alexis de Tocqueville almost two centuries ago; and not the perennial reasons given of Americans’ greater entrepreneurial spirit, or the seemingly sublime Protestant ethic and spirit of capitalism; this latter still being milked by our politicians to this date.

The retail landscape of the nation is undoubtedly in for a permanent change, and that’s where up to now we have based our pseudo standard of living, certainly an overstated level of affluence. Many Americans had found themselves spending money at a much faster pace than they earned it, but the financial sector will not be allowed to operate in the same dismal way as in the past allowing indiscriminate credit flow. That slowdown in retail operations is accelerating a commercial real estate collapse. And, if that weren’t enough, states and municipalities are likely to enter soon a wave of defaults.

The US economy has become a frayed and torn old suit that government and the Fed are now trying to patch; a suit that needs to be replaced, and not just patched. We are running out of options, and runaway inflation might end up being the result, in lieu of a cure. A scary prospect, knowing how ineffective the Fed will be in its control… and how savings are destroyed, totally devalued!

Sorry… no apparent wisdom from that person at the breakfast table. Our economic ills are real and not just a subject of concern created by a self-serving media.

Sadly, there we were, on the second day of summer saying good bye to the warm surroundings of Holly Hill B&B, taking back with us to Portland some very pleasant memories, leaving behind a city of dreams unfulfilled, beautiful surroundings and a paper mill producing over a third of a million tons of virgin and recycled pulp per year… and 58 tons of carcinogens; a clear and present reminder that capitalism continues to be an economic system of understated costs and overstated profits.

We will return to Port Townsend soon enough, but America will not return to normalcy ever. Why? The last quarter of a century has been anything but a time of economic normalcy for the United States as politicians sought to immerse the nation into a global economy that it was not prepared for while keeping a façade of prosperity bought with irresponsible credit. Reagan, Bush I, Clinton and Bush II jointly did away with possible fulfillment of any dream. Our only option now is to be realists and live within our means, but that’s hard to swallow for a population that was once shown wealth through a magnifying glass.